Commentary by President Dariusz Blocher on selected financial data of the Budimex Group for 1H2013

The decline in sales in the Group was mainly due to the very high sales of the construction segment generated in the first half of last year and difficult weather conditions prevailing until the end of April this year. In the second half of 2013, the Group does not expect such significant sales drops.

In the first half of this year. The Budimex Group achieved an operating profit higher than
In the corresponding period of the previous year, the profitability increased from 2.0% to 4.2%. The Group also improved profitability at all other levels of the result.

In the first half of 2013, the Group generated savings in management expenses and maintained a very good net cash position, especially compared to competitors. At the end of the first half of 2013, the net cash position of the Budimex Group amounted to PLN 640 million compared to PLN 305 million at the end of the corresponding period of the previous year.

In the first half of 2013, the gross margin of the construction segment was maintained and amounted to 7.2% compared to 7.4% in the same period of the previous year. At the same time, this segment improved its operating result by recording a profit of PLN 50.8 million with a margin of 2.9% compared to PLN 39.2 million of profit and a margin of 1.4% generated in the corresponding period of the previous year.

In the first half of this year. The Budimex Group signed contracts worth PLN 2.2 billion net. This is more than twice as high as the value of contracts signed in the corresponding period of the previous year (PLN 0.9 billion). As a result, the Group’s order book at the end of June this year. amounted to PLN 5.4 billion, increasing compared to the value of the portfolio at the end of 2012 (PLN 4.9 billion).

The first half of 2013 was also a good period for the development segment. Budimex Nieruchomości pre-sold 33% more flats (excluding bookings) compared to the same period last year (280 flats compared to 210 pre-sold flats in H1 2012).

The real estate development segment recorded a net profit of PLN 17 million compared to PLN 10 million net profit generated in H1 2012. The segment’s profitability at the level of the net result remains at the level of 12%. The net cash position of the real estate development segment at the end of the first half of 2013 is also satisfactory. It remains at a positive level, and compared to the corresponding period of the previous year, it has improved significantly.

In the entire six months of the year, Budimex Nieruchomości sold 299 apartments by notary, while
In the same period of 2012, it sold 243 units. It should be remembered that the notarial sale of apartments depends on the dates of completion of construction projects and handing over finished apartments to clients, it is not a seasonal phenomenon and comparable year to year.

In the second quarter of 2013, Budimex Nieruchomości launched three new residential projects: Wiślany Mokotów in Warsaw, the 3rd stage of the Myśliwska project in Kraków, and the Rolna project in Poznań. Currently, Budimex Nieruchomości offers over 800 flats in various locations of the above-mentioned cities, of which only 9% are completed and ready for use.

At the end of June 2013, the net cash position of the Budimex Group, including its own cash and short-term securities less external sources of financing, was very good and amounted to PLN 640 million, while at the end of the first half of 2012 it was PLN 305 million. In May this year. Budimex SA, continuing its policy of sharing profit with shareholders, paid a dividend of PLN 112 million, allocating almost the entire profit generated by the Company in 2012.

A slight decrease in prices and a favourable budget of EU funds for 2014-2020 allow us to look positively into the near future. The Budimex Group expects a revival in the tenders announced at the turn of the year. Currently, it is preparing for the new situation by accumulating resources and adjusting the Group’s structure so as to remain competitive while maintaining profitability and a good level of cash.

Selected financial data from the consolidated financial statements of the Budimex Group prepared in accordance with International Financial Reporting Standards (IFRS) for the first half of 2013 and comparable data for the first half of 2012.

Results of the reporting segments for the first half of 2013 (in PLN thousands):

Results of the reporting segments for the first half of 2012 (in PLN thousand):